Regulatory Environment and Entrepreneurial Activity: A Professional Assessment of FIRS and CAC Processes for SMEs

This study conducts a professional assessment of the regulatory environment confronting small and medium enterprises in Nigeria, with specific focus on the processes and costs associated with Federal Inland Revenue Service tax compliance and Corporate Affairs Commission registration and annual reporting requirements. The regulatory burden on Nigerian SMEs is consistently identified as among the most significant barriers to formalization and business growth, yet detailed professional assessment of specific regulatory touchpoints and their actual compliance costs for enterprises of different sizes and sectors remains limited. The study employs a structured assessment methodology, combining a survey of 150 SME owners and their accountants and business advisors with detailed administrative process mapping of current FIRS and CAC compliance workflows. Survey data capture time spent on compliance, direct financial costs of compliance, and the frequency and severity of administrative errors that delay processing. Process mapping identifies bottlenecks, redundancies, and digital transformation gaps in current agency workflows. Findings indicate that annual FIRS compliance costs, including accountant fees and administrative time, average 4.2 percent of revenue for micro-enterprises and 1.8 percent for small enterprises, representing a regressive cost burden. CAC annual returns compliance is reported as confusing and administratively burdensome by 68 percent of respondents. Online compliance portals exist but suffer from persistent technical reliability problems. Recommendations include the development of a unified SME compliance portal that aggregates FIRS and CAC obligations and provides pre-validated filing templates. Keywords: regulatory environment, tax compliance, SME, FIRS, CAC Nigeria.